GLOSSARY OF TERMS

							                                                 GLOSSARY OF TERMS
   ABATEMENT:
    A decrease or reduction in the price of a property (or in rent chargeable to a tenant). Usually occurs as a result of the discovery of a
    negative fact about the property, which decreases its value from the price originally agreed upon by the parties.

   ABSENTEE OWNER:
    An owner of a property who lives elsewhere, leaving tenants in control and occupation of the property.

   ABSORPTION RATE:
    Expressed as a percentage, the number of properties that can be bought or sold in a particular market. May be broken down as to types and
    sizes of properties.

   ACT OF GOD:
    When used in insurance policies, an event caused by natural forces such as rain, lightning, floods or earthquakes which results in damage to
    property or chattels.

   ACTUAL CASH VALUE:
    An insurance term, the value of a building calculated by subtracting the decrease in value caused by age and wear and tear from the cost of
    replacing the building entirely.

   ADEQUATE PUBLIC FACILITIES ORDINANCE:
    An ordinance by the local level of government controlling development by requiring that infrastructure works (roads, sewers, hydro lines) be
    completed prior to or concurrent with the building of dwellings or commercial buildings in a new development.

   ADJACENT LAND:
    An inexact term used to describe any property that is situated near or abutting a certain piece of property. Note, an abutting property will
    always be adjacent but an adjacent property may not be abutting.

   ADJUSTABLE RATE MORTGAGE (ARM):
    Also known as a Variable Rate Mortgage, a loan secured against land which has an interest rate that changes according to some outside
    index -- such as the federal prime rate or the interest rate paid on government bonds -- over the term of the mortgage. The change in
    interest rate will result in a change in the periodic payments due under the mortgage.

   AFTER-TAX CASH FLOW:
    The net proceeds from an income-producing property, after all costs (taxes, mortgage interest, maintenance costs etc.) of owning and
    operating the property have been deducted.

   AGREEMENT OF SALE:
    Also known as Purchase Agreement, Agreement of Purchase and Sale, Land Agreement etc. A legal contract in which one party agrees to
    buy and another agrees to sell a property or chattel. Contains terms and conditions of the transaction and is signed by the parties.

   AMORTIZATION:
    The preparation of a payment plan for a loan, which allows for equal payments to be made to the creditor at consistent intervals over the life
    of the loan (the amortization period). Each payment covers interest accrued over the interval period with the remainder of the
    payment being applied to reduce the principal owed. If every payment is made on time and in full over the amortization period, the loan will
    be completely repaid at the end of the amortization period.

   ANNUAL DEBT SERVICE:
    The total amount required to service a loan in a given year.

   APPLICATION FEE:
    The fees the lender charges the applicant. May include costs of a property appraisal and a credit report on the applicant. May be payable by
    applicant even if loan is not approved.

   APPRAISAL:
    An estimation of the value of a property on a certain date given by a qualified person, usually after an inspection of the property.

   BALANCE SHEET:
    A table of figures showing the assets, liabilities and net worth of a person or corporation on a given date.

   BASE RENT:
    The set rent payable by a tenant under a lease, to which is added Additional rents as required by the lease (for common area maintenance,
    for example, or for utilities).

   BLANKET INSURANCE POLICY:
    A single insurance policy that applies to more than one person or property.




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   BONA FIDE:
    Made in good faith, at fair market value, without deceit or fraud.

   BROKER:
    An intermediary who brings parties together for specific purposes. A mortgage broker brings borrowers together with lenders; a real estate
    broker brings purchasers together with vendors. Often charges a percentage of the contract price as a fee. Specific training required to
    become a Real Estate Broker, a professional designation.

   BUILD TO SUIT:
    An offer by a landowner to develop the land in a manner dictated by a potential tenant, in return for a long-term lease from the tenant for
    the developed land.

   BUILDING CODE:
    Set of regulations established by a municipality to govern the standards of construction in that municipality.

   CAP:
    A limit. In variable rate mortgages, a limit as to how high periodic payments may go or how much the interest may change within a given
    time period or over the life of the mortgage.

   CAPITAL IMPROVEMENT:
    Value enhancing work carried out on a capital property.

   CASH FLOW:
    Description of the net income from a property after all expenses of holding and carrying the property are paid.

   CEILING:
    The limit over which the interest rate on a variable rate mortgage may not rise over the life of the loan.

   CERTIFIED PROPERTY MANAGER (CPM):
    A person who has met the requirements of the Institute of Real-Estate Management.

   CLOSING COSTS:
    Moneys expended by a party in completing a transaction, over and above the purchase price, including: legal fees, taxes, mortgage
    application charges, interest adjustments, registration fees, appraisal fees, etc.

   CODE OF ETHICS:
    A set of rules governing the behavior of members of the organization that has established the Code. Lawyers and real estate brokers/agents
    both have their own Codes.

   COLLATERAL:
    Property (real or personal), which is pledged to secure a loan or mortgage. If the debt is not paid, the lender has the right to sell the
    collateral to recoup the outstanding principal and interest on the loan.

   COMMERCIAL BROKER:
    A real estate professional who deals in properties with commercial (business, retail, etc.) uses.

   COMMERCIAL PROPERTY:
    As opposed to residential or industrial property. Property zoned, designed or intended for use retail, office, or similar users.

   COMMISSION:
    Payment to a salesperson (a listing real estate agent or broker) for her efforts in marketing and selling a property, usually expressed as a
    percentage of the purchase price.

   CONSIDERATION:
    The value, asset, service, information etc. which is offered to another party in a contract in exchange for that party's agreeing to enter the
    contract. A contract is not binding if each party does not offer at least some consideration to the other party(ies).

   DEBT COVERAGE RATIO (DCR):
    A comparison of the net income of a property with the cost of payments (principal and interest) on the mortgage on the property, used to
    assess the ability of the property to generate enough income to pay for itself.

   DEBT EQUITY RATIO:
    A comparison of the amount owing on a property with the equity (value of property minus amount owing).

   DEBT RATIO:
    Also known as Debt-to-Income ratio. A comparison of the total monthly payments of all of the borrower's debts (including the mortgage)
    with the gross monthly income of the borrower, used to assess borrower's ability to pay mortgage.




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   DEBT SERVICE:
    The mortgage payment for a given period of time.

   DEED:
    The instrument by which title to property is conveyed from one person to another

   DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD):
    A federal agency focusing on programs regarding housing and renewal of city communities.

   DEPRECIATION:
    1. The lessening of the value of a property over time.
    2. A tax adjustment accounting for the reduction in value of an asset (a building or a piece of machinery) over time.

   DETACHED SINGLE-FAMILY HOME:
    A freestanding dwelling that is designed to house one family unit.

   DISCLOSURE STATEMENT:
    A document issued by a lender to a borrower in which the lender sets out the terms and conditions of the loan. Often required under
    legislation.

   DOWN PAYMENT:
    The amount of money provided by the Purchaser toward the total price of the property (not including legal fees or other acquisition costs).
    In general, down payment plus mortgage equals purchase price.

   ECONOMIC DEPRECIATION:
    The decline in value of a property, which is caused by reasons outside of the property itself.

   EFFICIENCY RATIO:
    A comparison of the space in a building available for lease to the total space of the building.

   EQUAL CREDIT OPPORTUNITY ACT:
    U.S. federal law aimed at affording people of all races, genders, religions, ages etc. an equal chance to borrow money.

   EXCLUSIVE AGENCY LISTING:
    A contract whereby the owner of a property grants a single agent or broker the right to market the property for sale.

   FAIR CREDIT REPORTING ACT:
    A law that standardizes the form and rules of disclosure of credit reports created by consumer/credit reporting agencies and establishes
    procedures for the correction of errors on a person's credit report.

   FINANCING:
    The manner in which a proposed purchaser intends to make up the difference between cash on hand and the purchase price.

   FORECLOSURE:
    An enforcement process in which the lender under a defaulted mortgage takes title to the property for the purposes of selling it to recoup
    moneys owed under the mortgage.

   GENTRIFICATION:
    The process in which a neighborhood is transformed from low-value to high-value properties.

   GRACE PERIOD:
    The time a borrower is allowed after a payment is due to make that payment without incurring penalties.

   GRADUATED LEASE:
    A rental agreement in which the periodic rental payments increase at specified points in time.

   GROSS AREA:
    The total floor space of a building, including unusable space, measured from the outside walls.

   HOUSING AND URBAN DEVELOPMENT (HUD):
    Federal Agency charged with the duty of overseeing a number of enactments relating to housing in America.

   IMPROVEMENTS:
    Things added to vacant land with the view to increasing its usefulness and value, such as buildings, parking areas, drainage works, etc.

   INCOME PROPERTY:
    A property that is owned or developed specifically to produce income for its owner.




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   KEY TENANT:
    For a commercial or office development, the resident who attracts other residents or customers, such as a major chain store in a mall or a
    law firm in an office building. May gain favorable lease provisions as an incentive to lease space.

   LEASE:
    A written agreement to rent a property or part of a property from the owner. Sets out premises rented ("demised premises"), amount to be
    paid, payment period, and other rights and obligations of the landlord and tenant.

   LEASE WITH OPTION TO PURCHASE:
    A rental contract, which allows the tenant to purchase the property during the period of the lease. Payments under the lease may be
    credited (in whole or in part) against the purchase price.

   LIEN:
    A legal claim against property for moneys owed.

   LISTING BROKER (AGENT):
    The real estate professional who acts for the vendor in marketing a property for sale. As opposed to Selling Broker (Agent) -- the agent
    representing the purchaser.

   LOAN APPLICATION FEE:
    The charge paid by the borrower for the honor of requesting a loan and of having the lender consider the request.

   MANAGEMENT AGREEMENT:
    A contract between an owner of a property and a property management firm in which the firm accepts periodic payments for acting as
    supervisor of the affairs of the property.

   MARKET VALUE:
    An estimation of the price that could be obtained for a particular asset if it were sold in an arm's length transaction on the current market.

   MINIMUM DOWNPAYMENT:
    The least amount of money a purchaser can provide toward the purchase price of a house under a mortgage loan program.

   MIXED-USE COMMERCIAL PROJECT:
    A development that is designed to mix two or more "uses" of land together (i.e. a shopping center which offers office space for dentists,
    etc.)

   MONTHLY DEBT SERVICE:
    The periodic payments required to remain current on all outstanding loans.

   MORTGAGE:
    A loan that is secured against property (i.e. registered on title as a claim or encumbrance on the property). Often used to purchase the
    property itself.

   MULTI-DWELLING UNITS:
    A property that may have one owner but offers a number of homes for separate people or families.

   NET CASH FLOW:
    The amount of money leftover from the income of a property after all costs and expenses of the property have been paid.

   NET LEASABLE AREA:
    The area in a building that is available for rent to tenants (excludes common areas, wasted space, etc.).

   NET OPERATING INCOME (NOI):
    The income from a property or business left over after the costs of operating the property or business have been paid.

   OCCUPANCY RATE:
    The percentage of available rental space that is actually rented and in use in a given building or community.

   OPERATING EXPENSES:
    Expenses payable on an income-producing property that are directly attributable to the use of the property for the purpose of producing
    income.

   POINT:
    Equal to 1% of the principal of a mortgage, a charge levied on the borrower by the lender for originating the mortgage as prepaid interest.
    Also known as "loan discount points".

   POTENTIAL GROSS INCOME:
    The amount of money that a property will generate if it is fully utilized with no gaps, vacancies or other interruptions in income.




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   RAW LAND:
    Property that has not been developed or improved.

   REAL ESTATE MARKET:
    A term for the pool of potential buyers and sellers of property at a given time.
   REFINANCE:
    To replace an existing and perhaps mature mortgage with a new mortgage on the same property. New mortgage may have different terms
    than the old one.

   RIGHT OF FIRST REFUSAL:
    The ability to make an offer for a property before the owner puts it up for sale on the open market.

   SECURITY DEPOSIT:
    Money held by the landlord to ensure the tenant meets his obligations under the lease.

   SELLER'S MARKET:
    Demand is greater than supply, such that the vendor may demand a higher price.

   SPECIAL USE PERMIT:
    A temporary exemption from zoning use by-laws or ordinances.

   SUBLEASE:
    A rental contract between a tenant and someone who rents from the tenant.

   TANGIBLE PROPERTY:
    Assets that can be touched, that have a physical existence.

   TENANCY:
    The right to use and occupy all or part of a property under a rental agreement.

   TENANCY FOR YEARS:
    Form of tenancy created by a written agreement in which the tenant has the right to occupy the premises for a stated period of time.

   TIME-SHARING:
    A form of joint ownership of property where numerous owners share title and enjoy use or occupation of the property according to a specific
    schedule.

   TRUTH-IN-LENDING ACT:
    A federal law that requires lenders to disclose all terms of a loan arrangement to the borrower in a specified form.

   UNDERWRITING:
    The decision as to whether or not to accept a loan or insurance application.

   UNSECURED LOAN:
    A loan in air, with no asset pledged as collateral or security for it.

   USEFUL LIFE:
    An estimation of the period of time over which a property, building or other asset will be of value or use to its owner.

   UTILITIES:
    Services, such as gas, electricity, water, sewers, which are required in any dwelling and for which the owner must pay separately. In some
    jurisdictions, arrears in payment of charges for utilities may form a lien on the property.

   VACANCY RATE:
    The calculation of the percentage of all available rental units in a particular area that are not occupied.

   VARIABLE INTEREST RATE:
    An interest rate that may change according to change in the index rate.

   ZONE:
    An area of a municipality to which certain rules, regulations, bylaws or ordinances apply.




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